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Nvidia is the central bank of AI

economist.com

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Re: Nvidia is the central bank of AI

#171

Post by jmalicki »

m4rtink wrote: post #135
jmalicki wrote: post #47

Earlier quoted context omitted.

NVidia is limited by the number of chips they can produce. If you can fab 1000 chips, and can sell some for $500 and some for $80000 what are you going to do? The game GPU is at once profitable, but causes them to give up far more profits than they're gaining from it. They're maintaining the game market to have multiple markets and not go all in, but it's strategic hedging at this point. When NVidia makes a gaming GP…

This almost seems like we need a strategic reserve for semiconductors- kinda like we have it for food, to prevent suppliers from throwing it away when they are suddenly able to sell something much more lucrative.

The CHIPS Act in the US did set aside a reserve for older processes used for automobile, defense, and industrial semiconductors - but that's not gaming GPUs that used the previous process node.

Re: Nvidia is the central bank of AI

#172

Post by sellmesoap »

kennywinker wrote: post #137
spott wrote: post #113

Earlier quoted context omitted.

Yea, but they would have to become insolvent in a way that makes compute lose value. The reason Nvidia is comfortable making these deals is because if OpenAI can’t use the compute, someone else can. Granted OpenAI going insolvent likely means a drop in the value of compute…

Compute has already lost value for me. Six months ago I thought you needed a 1T+ model to be useful coding. Now I am able to get by just fine with a 27b model. I see two factors converging to cause a collapse of this house of cards: 1. People are realizing that what they need isn't more general intelligence, it's more specialization. A small but well tuned coding model, a small but well tuned customer service model,…

I think what will keep the industry afloat, all else failing, is the surveillance industry! Nothing like a fat reoccurring cheque from the government to check if little Jimmy is committing thought crime!

Re: Nvidia is the central bank of AI

#174

Post by jurgenburgen »

kennywinker wrote: post #147
neilwilson wrote: post #109

Earlier quoted context omitted.

Almost like the concept is complete bunkum. It’s been zero in the UK for hundreds of years.

that.. doesn't make it better

It was replaced by other mechanisms. It’s not literally zero any kind of reserves.

Re: Nvidia is the central bank of AI

#175

Post by HPsquared »

manlymuppet wrote: post #74
sailfast wrote: post #57

Earlier quoted context omitted.

It would also follow that by increasing the money supply significantly they’re also contributing to inflation a great deal correct? (Given the rest of the economy is not growing at near the same rate as the AI industry)

Maybe a dumb question but how is NVIDIA increasing the total supply of money? Only the fed can actually order more money to be "created". Private companies can only work within the existing supply, that is, their reserves, no?

Any time sometime makes a loan at a bank, that money is created. An accompanying debt is also created. It's like matter and antimatter. And when the debt is repaid, the matter and antimatter disappear again.

Re: Nvidia is the central bank of AI

#176

Post by oblio »

jqpabc123 wrote: post #170
spott wrote: post #113

Earlier quoted context omitted.

Yea, but they would have to become insolvent in a way that makes compute lose value. The reason Nvidia is comfortable making these deals is because if OpenAI can’t use the compute, someone else can. Granted OpenAI going insolvent likely means a drop in the value of compute…

Granted OpenAI going insolvent All the "frontier" AI companies *are* currently insolvent. They have never been anything other than cash burning machines. The only way they keep the lights on and the doors open is by borrowing money --- and epic amounts of it. If those operating the cash spigot decide to turn it off, all AI companies will likely be similarly affected --- and so will Nvidia. OpenAI expects to burn thro…

To make things worse, hardware prices have spiked, due to AI companies.

Fairly sure data center construction costs are also going up (they require so many resources that everything is constrained at the moment, especially electricity production).

So I don't understand in what world these frontier AI companies can somehow become profitable. The basic tech they're using is basically the same. Yes, around the edges there are a lot of things that can be done, and were done, like caching, batching, mixture of experts, etc, but basically everyone has done all of that by now, and they're still losing money.

So:

Total costs going up a lot - revenues per unit not increasing proportionally, if anything, Chinese models are forcing those down.

How does that math work out to profits? I don't see it.

Or about as bad, after trillions of dollars in investments over multiple years, let's say the entire frontier AI sector has a total profit of $20bn by 2030. In what world does that make sense? Assuming they can scale that total profit to $100bn in 2035 without investing another cent from 2027 to 2035 (utterly ridiculous), the return on investment would happen in roughly 20 years.

Re: Nvidia is the central bank of AI

#177

Post by jeremyjh »

anana_ wrote: post #166

I'm curious what the actual rate of replacement/useful life of these GPUs running AI inference 24/7 is. If these cards burn out in less than the ~5 years of depreciation that accounting puts them at, well then there will be problems.

Quite a lot better than people originally thought. There is a LOT of demand for 5+ year old Ampere on the secondary market, and hyperscalers are still holding on to many of them since they can’t acquire new compute fast enough.

https://www.cnbc.com/video/2026/08/24/making-old-gpus-new-ag...

Re: Nvidia is the central bank of AI

#178

Post by indigodaddy »

SleightOfHand wrote: post #149
kennywinker wrote: post #137

Earlier quoted context omitted.

Compute has already lost value for me. Six months ago I thought you needed a 1T+ model to be useful coding. Now I am able to get by just fine with a 27b model. I see two factors converging to cause a collapse of this house of cards: 1. People are realizing that what they need isn't more general intelligence, it's more specialization. A small but well tuned coding model, a small but well tuned customer service model,…

You're not considering video which OpenAI opted out of when they retired Sora. Generative video requires significantly more computing power and energy than generative text. OpenAI is fucked, compute is still needed, it's just them that isn't.

oAI isn't anywhere near close to fucked as long as their models are head and shoulders above even the very best open models in terms of tool calling and rock solid stability/reliability for agents/coding harnesses. Which, they are right now and we'll see if open models actually catch up in that regard. Even the "best" open models pale in comparison with tool calling and general "prompt and go do something else for an hour" reliability that we have with GPT models. With GPT models, streaming rarely stops unexpectedly. You almost never have to constantly nudge them along, etc. Granted with open models all of this can vary depending on the provider, and perhaps open models/protocols/APIs/harnesses aren't well enough aligned, but OpenAI models just seem to work without constant (or hardly any) wrinkles and with almost any harness/agent.

Re: Nvidia is the central bank of AI

#179

Post by jqpabc123 »

oblio wrote: post #176
jqpabc123 wrote: post #170

Earlier quoted context omitted.

Granted OpenAI going insolvent All the "frontier" AI companies *are* currently insolvent. They have never been anything other than cash burning machines. The only way they keep the lights on and the doors open is by borrowing money --- and epic amounts of it. If those operating the cash spigot decide to turn it off, all AI companies will likely be similarly affected --- and so will Nvidia. OpenAI expects to burn thro…

To make things worse, hardware prices have spiked, due to AI companies. Fairly sure data center construction costs are also going up (they require so many resources that everything is constrained at the moment, especially electricity production). So I don't understand in what world these frontier AI companies can somehow become profitable. The basic tech they're using is basically the same. Yes, around the edges ther…

It's capitalism run amuck --- and on an epic scale.

China is the one that is really in the driver's seat here. They have the opportunity and the ability to nullify/wipe out our huge investment in AI.

Re: Nvidia is the central bank of AI

#180

Post by jmalicki »

JumpCrisscross wrote: post #159
hammock wrote: post #152

Earlier quoted context omitted.

Wasn’t trying to dick measure nvda vs fed. More thinking thru guarantees vs assets for the two institutions

> guarantees vs assets for the two institutions The Fed can never default on any dollar-denominated debt. There is no similar currency that Nvidia can create ad infinitum . That said, the number I think you're looking for in respect of the Fed is $30 to 40 trillion. It's about U.S. GDP. And it's also about U.S. bank and money-market assets plus the Fed's balance sheet. If every American bank failed, this could be the…

> There is no similar currency that Nvidia can create ad infinitum.

It can create obligations to provide future GPUs in return for present money.

Yes at some point people might start to question, but what are the true hard limits there, especially once SPVs and such start to get involved to shuffle things off the books?

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